financial report

93

The Smithsonian Institution receives funding from both federal appropriations and nonap-

propriated trust sources. Nonappropriated trust funds include all funds received from

sources other than direct federal appropriations. These other sources include gifts and

grants from individuals, corporations, and foundations; grants and contracts from federal,

state, or local government agencies; earnings from short- and long-term investments; reve-

nue from membership programs; and revenue from sales activities, such as Smithsonian

magazine, museum shops and restaurants, mail order catalogues, and licensed products.

Federal appropriations provide funding for the Institution’s core functions: caring for

and conserving the national collections, sustaining basic research on the collections and in

selected areas of traditional and unique strength, and educating the public about the col-

lections and research findings through exhibitions and other public programs. Federal ap-

propriations also fund a majority of the activities associated with maintaining and securing

the facilities and with various administrative and support services.

Smithsonian trust funds allow the Institution to undertake new ventures and enrich ex-

isting programs in ways that would not otherwise be possible. These funds provide the crit-

ical margin of excellence for innovative research, building and strengthening the national

collections, constructing and presenting effective and up-to-date exhibitions, and reaching

out to new and under-represented audiences. In recent years, the Smithsonian has also be-

gun to rely in part on trust funds for the funding of major new construction projects.

The following sections describe the external environmental factors affecting the

Institution’s general financial condition, its financial status, and its planned response to

changing conditions; financial results for fiscal year 1998; and organizational and financial

measures being taken to ensure the continued fiscal health of the Institution.

Financial Status and Prospects

In fiscal year 1998, the Smithsonian took major steps to address the increasing financial

needs of the Institution. Congress has been very supportive of the Institution in its pro-

vision of federal appropriations for core functions and the maintenance of facilities. This

support, however generous, cannot be expected to sustain the growing costs of new

exhibitions and programs that allow the Institution to continue as a world-class center

for research and education. Consequently, in fiscal year 1998, the Institution focused on

restoring and strengthening its revenue-generating activities, as well as on its fund-raising

efforts.

Over the past several years, income from the Institution’s business activities has

remained relatively static. In response, the Institution made two critical decisions. The first

FINANCIAL REPORT

RICK JOHNSON, CHIEF FINANCIAL OFFICER

was to discontinue the commercial activities of

Smithsonian Press/Smithsonian Productions, trans-

ferring the profitable ventures to Smithsonian Retail

and establishing the University Press division as a

programmatic function of the Institution under the

auspices of the Provost with the name Smithsonian

Institution Press.

As an important step to promote the long-term

growth of the Institution’s business activities and en-

sure its financial health, the Board of Regents ap-

proved a new approach for managing those ventures.

Major elements of this new approach include the cre-

ation of a separate organization within the Institu-

tion to increase the Smithsonian’s major business ac-

tivities, the creation of a separate board of directors

to help guide the new organization and the recruit-

ment of a senior level business executive to be the

new organization’s chief executive officer. The goal

of the new approach is to double the annual level of

business-generated trust dollars available for the In-

stitution within the next five years.

Fund raising received continuing attention as a

critical element in the improvement of the Insti-

tution’s financial position. Work was begun in

earnest on the Smithsonian’s capital campaign.

An overarching strategy has been developed and a

budget established to fund the campaign. Currently

in its “quiet phase,” the campaign has already

achieved substantial results. In fiscal year 1998,

donor and sponsor support was at its highest level

in the Institution’s history.

Fiscal Year 1998 Results

Revenues received by the Institution in fiscal year

1998 from all sources totaled $774.5 million. Reve-

nue from federal appropriations accounted for

$393.0 million, and nonappropriated trust funds pro-

vided an additional $381.5 million. When adjusted to

remove auxiliary activity expenses of $197.0 million,

net revenues totaled $577.5 million. The chart on

page 95 reflects revenues by source and broad pur-

pose of use.

Operations (Tables 1 and 2)

Federal operating revenue of $331.5 million provided

the core funding for ongoing programs of the Institu-

tion. The fiscal year 1998 operating appropriation of

$333.4 million represented an increase of $14.9 mil-

lion from the fiscal year 1997 level. Total increases

were $15.7 million, with $.8 million in one-time

funding being returned. Increases to cover certain un-

controllable costs included $6.6 million to cover the

cost of mandated pay and benefit increases, $2.7 mil-

lion for utility costs, and $.3 million for inflation for

library materials. In addition, the following program

increases were provided: $1.2 million to fund opera-

tion of the Smithsonian Astrophysical Observatory

Submillimeter Telescope Array, $3.0 million for the

National Museum of Natural History’s East Court

project, $1.0 million for collections information sys-

tems, and $.9 million for other projects.

General trust revenue was $270.6 million. Overall

revenue levels in this category were up 3 percent over

the prior year. Donor/sponsor revenue was up

8 percent, sales and membership revenue was up

5 percent, and other revenue was down 41 percent,

primarily as a result of the closedown of 150th an-

niversary activities. Overall net revenue for auxiliary

activities declined 9 percent. Major increases in net

revenue for museum shops/mail order and conces-

sions were offset by a loss for Smithsonian Press/

Smithsonian Productions related to discontinuation

of major portions of that operation.

Revenue from donor/sponsor designated funds to-

taled $53.5 million. Donor/sponsor revenue in this

category increased by 123 percent over the prior year

as a result of intensified fund-raising activities and

the development of and focus on new strategies. In

addition, 150th anniversary activities had a positive

impact on overall giving. Major gifts and grants in-

94

FY 1998 Sources of Net Revenues

Gov’t Grants &Contracts9.9%

Donor/Sponsor15.1%

Federal Appropriations68.1%

General Trust6.9%

cluded $20 million from the Kenneth E. Behring fam-

ily to support exhibitions, public programs and re-

lated activities at the National Museum of Natural

History, $5 million from the Pew Charitable Trusts to

the National Museum of American History for the

Star-Spangled Banner Preservation Project and $1.3

million from the Nippon Foundation to the National

Museum of Natural History for the “Ainu: Spirit of a

Northern People” project. The Smithsonian is espe-

cially grateful to its many friends in the private sector

whose generosity contributed vitally to its work. The

names of major donors are listed in the Benefactors

section of this annual report.

In fiscal year 1998, the Institution recorded $57.3

million in income from contracts and grants from

government agencies, an increase of $.6 million over

fiscal year 1997. Support from government agencies

constitutes an important source of research monies

for the Institution while also providing the granting

agencies access to Smithsonian expertise and

resources. As in prior years, the majority of these

funds were provided by the National Aeronautics and

Space Administration for research programs at the

Smithsonian Astrophysical Observatory. Other

awards included $1 million from the National Sci-

ence Foundation for a program in science education

developed by the National Science Resources Center

and $.5 million from the Department of Energy for a

study of carbon dioxide levels in selected ecosystems

at the Smithsonian Tropical Research Institute.

Endowment (Tables 3, 4, and 5)

The Institution pools its endowment funds for invest-

ment purposes into a consolidated portfolio, with

each endowment purchasing shares in a manner sim-

ilar to shares purchased by an investor

in a mutual fund.

The Investment Policy Committee of the Smith-

sonian’s Board of Regents establishes investment pol-

icy and recommends the annual payout for the con-

solidated endowment. The Smithsonian’s policies for

managing the endowment are designed to achieve

two objectives: to provide a stable, growing stream of

payouts for current expenditures and to protect the

value of the endowment against inflation and main-

tain its purchasing power. Current policy calls for an

average payout of 4.5 percent of the average market

value over the prior five years. The investment policy

targets a real rate of return of 5 percent.

As depicted in the chart on page 96, the market

value of the endowment decreased from $600 million

to $580.9 million during fiscal year 1998, reflecting

the market downturn in the last quarter of the fiscal

year. New gifts and internal transfers totaled $11.5

million, while the payout was $19.7 million and fees

were $1.5 million.

The total return on the consolidated portfolio

was (8.16) percent, reflecting the market downturn

in the last quarter of the fiscal year. Returns rose

again substantially as the market rebounded in the

last months of calendar year 1998. At year’s end,

the Institution’s portfolio was invested 64 percent in

equities, 33 percent in bonds, and 3 percent in cash.

The portfolio had 22 percent in foreign stocks and

bonds and 78 percent in U.S. securities.

Construction and Plant Funds (Table 6)

In fiscal year 1998, the federal appropriations for con-

struction were $68.8 million. This amount included

$32.0 million for general repair, restoration, and code

95

Fiscal Year 1998 Sources of Gross/Net Revenues

Gross Revenues Net* Revenues Percent Net ($thousands) ($thousands) Revenues (%)

Operations

Federal Appropriations 393,032 393,032 68.1General Trust** 237,026 40,036 6.9Donor/Sponsor** 87,081 87,081 15.1Gov’t Grants & Contracts 57,320 57,320 9.9

Total Sources for Operations 774,459 577,469 100.0

*Net of expenses related to revenue-generating activities, e.g., museum shops, restaurants, publications, etc.**General trust is reduced from Table 1 by the Donor/Sponsored Contributions.

compliance projects throughout the Institution.

With the support of Congress, the Institution contin-

ues to seek the $50 million per year required to main-

tain systematic renewal of its physical plant. Funds

earmarked for new construction, alterations, and

modifications totaled $36.8 million. Included in this

amount is $29.0 million for the Mall museum for the

National Museum of the American Indian; $3.8 mil-

lion for renovations, repairs, and master plan projects

at the National Zoological Park; and $4.0 million for

planning and design of the National Air and Space

Museum Dulles Center.

Nonappropriated trust construction funds,

also termed plant funds, totaled $5.2 million.

Approximately $3.5 million supported construction

of facilities for the National Museum of the

American Indian; $1.4 million supported renovation

of the Cooper-Hewitt, National Design Museum; and

$0.3 million contributed to the reinstallation

of the Janet Annenberg Hooker Hall of Geology,

Gems, and Minerals at the National Museum of

Natural History.

Financial Position

The Smithsonian Institution’s Statement of Financial

Position presents the total assets, liabilities, and net

assets of the Institution. Total assets of $1.5 billion

far exceed total liabilities of $394.0 million and are

indicative of the financial strength of the Institution.

During fiscal year 1998, the most significant change

in the Institution’s financial position was a $41 mil-

lion increase in debt to finance the Discovery Center

at the National Museum of Natural History and a $37

million increase in investments levels.

Financial Management

During the year, the Smithsonian’s Office of Infor-

mation Technology conducted an analysis of the Year

2000 software problem. That analysis indicated that

for all major critical systems the Institution will be

Year 2000 compliant. In one instance, software can-

not be made compliant, but an alternative solution

will be employed to solve the problem. At present, all

major financial system software is warranted to be

Year 2000 compliant. Nevertheless, the Institution

will continue to conduct testing during fiscal year

1999 to confirm these findings.

Other financial management improvement

initiatives undertaken in fiscal year 1998 included:

• A new database for sponsored project data that

will increase the efficiency and effectiveness of

managing sponsored projects. This database is also

the source of critical financial measures for spon-

sored project activity that is distributed to senior

management in weekly and monthly reports.

• Additional application modules for the Institu-

tion’s Budget Management, Planning, and Policy

System. This improvement has further automated

the budget and planning process, eliminating

duplication of data entry and reducing error rates.

• A system to facilitate use of a new travel credit card

for employees. The system includes an enhanced

ability for tracking and reporting activity. Use of

the travel card will be greatly increased over use of

the previous card.

• A new electronic fund transfer system for vendor

payments and employee reimbursements. Most

paychecks are already sent electronically. The sys-

tem was scheduled to be launched on January 1,

1999.

• A major training effort for unit staff in procure-

ment and contracting. This training is required

to support the delegation of greater procurement

and contracting authority to program units and

to implement other changes to the procurement

and contracting process.

Additional financial management improvement

initiatives planned to start in fiscal year 1999 include

the following:

• Electronic routing of monthly financial reports

• Updating and streamlining of financial policies

96

Market Value of Endowment and Similar Funds(in $ millions)

1994 1995 1996 1997 1998

379435

483

600 581600

500

400

300

200

100

0

and procedures

• Automation of payroll data entry at the unit

level

• Implementation of software to facilitate accurate

preparation of travel authorization and voucher

forms

Audit Activities

The Institution’s financial statements are audited

annually by KPMG LLP, an independent public

accounting firm. The audit plan includes an in-depth

review of the Institution’s internal control structure.

KPMG LLP Independent Auditors’ Report for fiscal

year 1998 and the accompanying financial state-

ments are presented on the following pages. The

97

Smithsonian’s internal audit staff, part of the Office

of Inspector General, assists the external auditors and

regularly audits the Institution’s various programs,

activities, and internal control systems. The Audit

and Review Committee of the Board of Regents pro-

vides an additional level of financial oversight and

review.

In accordance with the government requirement

for the use of coordinated audit teams, the Defense

Contract Audit Agency, the Smithsonian Office of In-

spector General, and KPMG LLP coordinate the audit

of grants and contracts received from federal

agencies.

Table 1. Source and Application of Institutional Resources for the Year Ended September 30, 1998 (in $000s)

Trust Funds

Donor/ Government TotalFederal General Sponsor Grants & Trust TotalFunds Trust Designated Contracts Funds FY 1998

REVENUE & GAINS:Federal Appropriations (see Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . 331,484 — — — — 331,484Endowment Payout & Investment Income. . . . . . . . . . . . . . . . . . . . — 15,582 6,524 — 22,106 22,106Government Grants and Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . — — — 57,320 57,320 57,320Donor / Sponsor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 33,570 46,987 — 80,557 80,557Sales and Membership Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 213,109 — — 213,109 213,109Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,548 — — — — 61,548Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 8,335 — — 8,335 8,335

TOTAL REVENUE & GAINS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 393,032 270,596 53,511 57,320 381,427 774,459

EXPENSES:Museums & Research Institutes:

Anacostia Museum and Center for African AmericanHistory and Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,752 702 632 — 1,334 3,086

Archives of American Art . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,587 123 677 — 800 2,387Arthur M. Sackler Gallery/Freer Gallery of Art . . . . . . . . . . . . 5,711 5,664 1,679 — 7,343 13,054Center for Folklife Programs & Cultural Studies . . . . . . . . . . . 1,861 1,080 548 — 1,628 3,489Center for Materials Research and Education . . . . . . . . . . . . . 2,770 111 11 7 129 2,899Cooper-Hewitt, National Design Museum. . . . . . . . . . . . . . . . 2,829 2,795 992 86 3,873 6,702Hirshhorn Museum & Sculpture Garden . . . . . . . . . . . . . . . . . 4,272 1,827 358 — 2,185 6,457National Air and Space Museum . . . . . . . . . . . . . . . . . . . . . . . . 12,340 2,742 2,843 532 6,117 18,457National Museum of African Art . . . . . . . . . . . . . . . . . . . . . . . . 4,318 520 4 — 524 4,842National Museum of American Art (incl. Renwick) . . . . . . . . 7,339 1,699 1,439 — 3,138 10,477National Museum of American History . . . . . . . . . . . . . . . . . . 18,654 2,154 3,800 16 5,970 24,624— National Postal Museum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 512 93 4,972 — 5,065 5,577National Museum of the American Indian. . . . . . . . . . . . . . . . 13,313 1,494 3,242 (8) 4,728 18,041National Museum of Natural History . . . . . . . . . . . . . . . . . . . . 38,324 6,391 2,509 1,784 10,684 49,008— Museum Support Center . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,170 — 1 — 1 3,171National Portrait Gallery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,592 452 396 — 848 5,440National Zoological Park . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,914 1,349 1,110 710 3,169 22,083Smithsonian Astrophysical Observatory . . . . . . . . . . . . . . . . . 24,352 6,439 1,599 49,450 57,488 81,840Smithsonian Environment Research Center . . . . . . . . . . . . . . 3,123 359 232 1,805 2,396 5,519Smithsonian Tropical Research Institute . . . . . . . . . . . . . . . . . 9,208 2,152 1,112 1,508 4,772 13,980

Total Museums & Research Institutes . . . . . . . . . . . . . . . . . . . . 178,941 38,146 28,156 55,890 122,192 301,133

Education, Museum & Scholarly Services:Center for Museum Studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,005 113 3 — 116 1,121Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 733 486 154 66 706 1,439Exhibits Central . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,079 86 37 — 123 2,202Fellowships and Grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221 1,512 82 — 1,594 1,815International Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,051 380 46 63 489 2,540National Science Resources Center . . . . . . . . . . . . . . . . . . . . . . 216 602 141 1,130 1,873 2,089The Provost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,709 1,875 1,369 173 3,417 5,126Smithsonian Institution Archives . . . . . . . . . . . . . . . . . . . . . . . 1,330 139 59 — 198 1,528Smithsonian Institution Libraries . . . . . . . . . . . . . . . . . . . . . . . 5,889 981 177 — 1,158 7,047Smithsonian Institution Traveling Exhibition Service . . . . . . 2,862 599 904 — 1,503 4,365Sponsored Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 940 — — 940 940

Total Education, Museum & Scholarly Services . . . . . . . . . 18,095 7,713 2,972 1,432 12,117 30,212

Auxiliary Activities (Programmatic) . . . . . . . . . . . . . . . . . . . . . . . . . 1,564 101 171 — 272 1,836America’s Smithsonian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1,611 708 — 2,319 2,319Prior Year Annual Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,647 — — — — 10,647

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209,247 47,571 32,007 57,322 136,900 346,147Allocation of Facilities and Depreciation Expense . . . . . . . . . . . . . 106,766 4,780 — — 4,780 111,546

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 316,013 52,351 32,007 57,322 141,680 457,693

Auxiliary Activities:Smithsonian Press / Smithsonian Productions. . . . . . . . . . . . . . — 17,061 — — 17,061 17,061Smithsonian Magazines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 57,581 — — 57,581 57,581The Smithsonian Associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 32,866 — — 32,866 32,866SI Retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 67,211 — — 67,211 67,211Unit Auxiliary Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 22,271 — — 22,271 22,271

Total Auxiliary Activities (including Overhead) . . . . . . . . . . . . . . . — 196,990 — — 196,990 196,990

98

Table 1. Source and Application of Institutional Resources for the Year Ended September 30, 1998 (in $000s)—(continued)

Trust Funds

Donor/ Government TotalFederal General Sponsor Grants & Trust TotalFunds Trust Designated Contracts Funds FY 1998

Administration:Membership and Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 2,494 16 — 2,510 2,510Administrative Offices (Net of Overhead Recovery) . . . . . . . . . . . . 31,085 5,748 239 (2) 5,985 37,070

Total Administration before Allocation of Facilitiesand Depreciation Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,085 8,242 255 (2) 8,495 39,580

Allocation of Facilities and Depreciation Expense . . . . . . . . . . . . . 15,855 360 — — 360 16,215

Total Administration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,940 8,602 255 (2) 8,855 55,795

Facilities Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91,430 841 — — 841 92,271Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,191 4,299 — — 4,299 35,490Allocation of Facilities Services and Depreciation to Functions . . (122,621) (5,140) — — (5,140) (127,761)

Total Facilities Services and Depreciation . . . . . . . . . . . . . . . . — — — — — —

TOTAL EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 362,953 257,943 32,262 57,320 347,525 710,478

Endowment Return Reinvested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (21,207) (9,618) — (30,825) (30,825)Proceeds from Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 737 — — 737 737

Net increase (decrease) in net assets . . . . . . . . . . . . . . . . . . . . . 30,079 (7,817) 11,631 — 3,814 33,893

Net assets, beginning of the year . . . . . . . . . . . . . . . . . . . . . . . . 396,192 — — — 714,618 1,110,810Net assets, end of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 426,271 — — — 718,432 1,144,703

Note 1: Includes $363 thousand revenue recognized as a permanent indefinite appropriation for the Canal Zone Biological Area Fund. Also, includes$1,594 thousand revenue recognized in foreign currency for research projects in India.

Table 2. Auxiliary Activities, Fiscal Year 1998 (in $000s)

Sales and NetMembership Revenue Gifts Expenses Revenue (Loss)

FY 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202,467 856 183,369 19,954

FY 1998:Central Auxiliary ActivitiesMagazines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,083 4 57,581 12,506The Smithsonian Associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,527 — 32,868 (341)Museum Shops/Mail Order* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,999 — 64,656 6,343Concessions* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,707 — 1,688 3,019Product Development and Licensing* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,417 — 865 552Smithsonian Press/Smithsonian Productions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,734 — 17,061 (7,327)

Unit Auxiliary ActivitiesAir and Space Theater and Einstein Planetarium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,160 — 3,302 1,858Cooper-Hewitt, National Design Museum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,229 4 776 457Traveling Exhibition Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 722 — 727 (5)Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,531 2,037 17,466 1,102

TOTAL FY 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213,109 2,045 196,990 18,164

*The Business Management Office expenses were allocated to Museum Shops/Mail Order, Concessions, and Product Development and Licensing.

99

Table 3. Endowment and Similar Activities September 30, 1998 (in $000s)

MarketValue

ASSETS:Pooled Consolidated Endowment:Cash and equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,270Other Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 836US Government and Quasi-Government Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,731Corporate Bonds and Other Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169,779Common and Preferred Stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 373,146Receivable for Securities Sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,902

Total Pooled Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 620,664

Nonpooled Endowment and Similar Activities:Loan to U.S. Treasury in Perpetuity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,050Promises to Give - Gifts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,387Promises to Give - Charitable Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,565Notes Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245Gift Annuity Program Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 447

Total Nonpooled Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,694

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 632,358

LIABILITIES AND NET ASSETS:

LIABILITIES:Payables for securities purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,865Deferred Revenue—Charitable Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25Annuity Payment Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247

Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,137

NET ASSETSUnrestricted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215,094Unrestricted Designated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172,514Temporarily Restricted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138,686Permanently Restricted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64,927

Total Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 591,221

Total Liabilities and Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 632,358

Table 4. Changes in Market Value of Endowment and Similar Activities September 30, 1998 (in $000s)

Unrestricted Temporarily PermanentlyUnrestricted Designated Restricted Restricted Total

Market Value Endowment - 10/1/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 226,026 177,979 148,759 47,196 599,960Changes:Gifts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — 4,822 4,822Internal Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 524 4,061 (1,929) 4,058 6,714Other

Interest and Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,614 4,568 4,914 459 17,555Market Value Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,093) (8,394) (8,477) — (26,964)Payout . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,508) (5,700) (6,059) (459) (19,726)Manager’s Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,469) — — — (1,469)

Market Value Endowment - 9/30/98 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215,094 172,514 137,208 56,076 580,892

Promises to Give . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 920 6,467 7,387Charitable Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 558 1,955 2,513Gift Annuities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — 184 184Notes Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — 245 245

Market Value Endowment and Similar Activities - 9/30/98 . . . . . . . . . . . 215,094 172,514 138,686 64,927 591,221

100

Table 5. Endowment and Similar Activities September 30, 1998

Market Values

Unrestricted Temporarily Permanently TotalUnrestricted Designated Restricted Restricted Market Value

UNDESIGNATED PURPOSE - TRUE:

Avery Fund (See Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450,207 — — 49,334 499,541Dodge, Patricia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218,246 — — 960,518 1,178,764Fund for the Future-Unrestricted (See Note 1) . . . . . . . . . . . . . . . . . . 169,683 — — 931,677 1,101,360Fund for the Future-Glass, Gilbert W. (See Note 1) . . . . . . . . . . . . . . . — — — 64,778 64,778Fund for the Future-Schermer, Lloyd G. and Betty (See Note 1) . . . . — — — 414,040 414,040Fund for the Future-Holmberg, Ruth S. (See Note 1) . . . . . . . . . . . . . — — — 900,590 900,590Higbee, Harry, Memorial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146,768 — — 30,672 177,440Hodgkins Fund (See Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 394,017 — — 202,927 596,944Morgan, Gilbert B. and Betty J., Memorial . . . . . . . . . . . . . . . . . . . . . . 35,075 — — 35,000 70,075Morrow, Dwight W. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 825,823 — — 100,000 925,823Mussinan, Alfred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231,760 — — 38,990 270,750Olmsted, Helen A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,451 — — 1,000 9,451Poore, Lucy T. and George W. (See Note 1) . . . . . . . . . . . . . . . . . . . . . 1,736,562 — — 288,941 2,025,503Porter, Henry Kirke, Memorial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,128,562 — — 290,162 3,418,724Sanford, George H. (See Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,051 — — 2,706 12,757Smithson, James (See Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203,425 — — 229,831 433,256Smithson Society, James (See Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . 277,167 — — 1,214,860 1,492,027

— — — — —

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,835,797 — — 5,756,026 13,591,823

UNDESIGNATED PURPOSE - QUASI:

Dodge, Patricia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 282,583 — — — 282,583Ettl, Charles H. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,077,841 — — — 2,077,841Ferguson, Frances B. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,014,681 — — — 1,014,681Forrest, Robert Lee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,302,634 — — — 10,302,634Fund for the Future-Unrestricted (See Note 1) . . . . . . . . . . . . . . . . . . 820,537 — 20,000 — 840,537General Endowment (See Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181,752,962 — — — 181,752,962Goddard, Robert H. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81,590 — — — 81,590Habel, Dr. S. (See Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 972 — — — 972Hart, Gustavus E. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,106 — — — 6,106Henry, Caroline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,059 — — — 15,059Henry, Joseph and Harriet A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 602,309 — — — 602,309Heys, Maude C. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,002,501 — — — 1,002,501Hinton, Carrie Susan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293,264 — — — 293,264Koteen, Dorothy B. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 349,823 — — — 349,823Lambert, Paula C. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 538,031 — — — 538,031Medinus, Grace L. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,978 — — — 9,978O’Dea , Laura I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 342,568 — — — 342,568Phillips, Roy R., Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,473,414 — — — 1,473,414Rhees, William Jones (See Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,988 — — — 6,988Safford, Clara Louise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 468,259 — — — 468,259Smithsonian Bequest Fund (See Note 1) . . . . . . . . . . . . . . . . . . . . . . . 4,317,371 — 57,368 — 4,374,739Sultner, Donald H. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,277,331 — — — 1,277,331Taggard, Ganson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,706 — — — 5,706Winterer, Alice I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215,622 — — — 215,622

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207,258,130 — 77,368 — 207,335,498

Total Undesignated Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215,093,927 — 77,368 5,756,026 220,927,321

DONOR DESIGNATED PURPOSE - TRUE:

Aitken, Annie Laurie . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 359,051 — 325,000 684,051Arthur, James . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 409,128 54,587 463,715Axelrod, Dr. Herbert R. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 49,124 120,000 169,124Axelrod, Herbert R. & Evelyn, Music . . . . . . . . . . . . . . . . . . . . . . . . . . — — — 950,000 950,000Axelrod, Herbert R. & Evelyn, Revolving Chair . . . . . . . . . . . . . . . . . . — — — 1,460,000 1,460,000Baird, Spencer Fullerton . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 364,151 — 50,362 414,513Barney, Alice Pike, Memorial (See Note 1) . . . . . . . . . . . . . . . . . . . . . . — 317,301 — 828,445 1,145,746Batchelor, Emma E. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 283,729 60,000 343,729Beauregard, Catherine, Memorial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 412,832 141,227 554,059Bergen, Charlotte V. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 24,319 10,000 34,319Brown, Roland W. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 216,593 69,041 70,295 355,929Burch, George E. Fellowship in Theoretic Medicine and

Affiliated Theoretic Sciences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 1,449,751 1,668,889 3,118,640Camel Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 37,439 76 100,800 138,315

101

Table 5. Endowment and Similar Activities September 30, 1998 (continued)

Market Values


DONOR DESIGNATED PURPOSE - TRUE: (Continued)

Canfield, Fredrick A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 14,307 450,369 46,233 510,909Casey, Thomas Lincoln . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 147,874 1,000 148,874Chamberlain, Francis Lea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 291,277 35,000 326,277Chinese Art Research (See Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — 500,000 500,000Cooper Fund for Paleobiology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 332,494 13,574 247,580 593,648Cuatrecasas, Jose, Botanical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 33,000 — 72,124 105,124Cullman, Joseph F. III (See Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — 100,000 100,000Davis Foundation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 26,188 125,000 151,188deSalle, Albert and Peggy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 4,147 16,640 65,000 85,787Deibel, Charles P. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 45,288 — 100,000 145,288Discovery Communications, Inc. (See Note 1) . . . . . . . . . . . . . . . . . . — 235,278 — 2,402,262 2,637,540Division of Mammals Curators Fund . . . . . . . . . . . . . . . . . . . . . . . . . . — 21,661 — 8,901 30,562Dodge, Gary and Rosalind, Memorial . . . . . . . . . . . . . . . . . . . . . . . . . — — 2,845 25,000 27,845Drake Foundation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 1,586,475 448,355 2,034,830Drouet, Francis and Louderback, Harold B. . . . . . . . . . . . . . . . . . . . . . — — 412,243 254,072 666,315Dykes, Charles, Bequest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 599,925 131,978 731,903Eaton, Harriet Phillips . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 49,425 — 64,403 113,828Eickemeyer, Florence Brevoort . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 115,392 10,500 125,892Eppley Memorial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 23,187 — 30,214 53,401Forbes, Edward Waldo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1,073,891 — 818,912 1,892,803Freer, Charles L. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 7,468,936 84,318,008 1,958,591 93,745,535Fund for the Future-Samuel C. Johnson Theater . . . . . . . . . . . . . . . . — 358,191 — 1,003,120 1,361,311Fund for the Future-Mary L. Ripley Garden . . . . . . . . . . . . . . . . . . . . . — 6,880 26,147 129,516 162,543Fund for the Future-Ethel Niki Kominik . . . . . . . . . . . . . . . . . . . . . . . — 43,591 — 100,000 143,591Fund for the Future-Vincent Wilkinson . . . . . . . . . . . . . . . . . . . . . . . — 5,557 14,212 144,526 164,295Fund for the Future-Jerome and Dorothy Lemelson (See Note 1) . . . — — 322,771 4,943,307 5,266,078Fund for the Future-Smithsonian Luncheon Group (See Note 1) . . . — 25,942 — 128,751 154,693Fund for the Future-Frank J. Lukowski ( See Note 1) . . . . . . . . . . . . . — — — 134,868 134,868Fund for the Future-National Postal Museum . . . . . . . . . . . . . . . . . . . — — 2,358 25,000 27,358Fund for the Future-Craveri/Giamporcaro (See Note 1) . . . . . . . . . . . — — 475 500,000 500,475Fund for the Future-Dutton, William C. (See Note 1) . . . . . . . . . . . . — — — 10,013 10,013Fund for the Future-Konze, Alice Stockton (See Note 1) . . . . . . . . . . — — — 46,840 46,840FSG Education Program Fund (See Note 1) . . . . . . . . . . . . . . . . . . . . . — — — 1,000,000 1,000,000Global Environmental Endowment Fund . . . . . . . . . . . . . . . . . . . . . . — 2,311 — 3,000 5,311Grimm, Sergei N. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 221,849 — 71,863 293,712Groom, Barrick W. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 195,659 — 100,000 295,659Guggenheim, Daniel and Florence . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 948,380 251,108 1,199,488Hamilton, James (See Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 5,731 — 4,150 9,881Haupt, Enid A. Garden . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 1,303,698 3,106,978 4,410,676Henderson, Edward and Rebecca R., Meteorite Fund . . . . . . . . . . . . . — — 206,186 257,256 463,442Herman, Lloyd E. (See Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — 79,347 79,347Hewitt, Eleanor G., Repair Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 66,525 — 15,003 81,528Hewitt, Sarah Cooper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 377,230 — 88,633 465,863Hillyer, Virgil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 71,070 7,000 78,070Hirayama Fund (See Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 85,311 2,583,247 2,668,558Hitchcock, Albert S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 17,376 1,200 18,576Hodgkins Fund (See Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 48,398 — 146,012 194,410Hotung, Sir Joseph . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 3,982 100,000 103,982Hrdlicka, Ales and Marie . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 394,325 111,982 71,000 577,307Hughes, Bruce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 212,684 9,352 222,036Huntington Publication Fund (See Note 1) . . . . . . . . . . . . . . . . . . . . . — 205,345 — 508,960 714,305Johnson, Seward, Trust Fund for Oceanography . . . . . . . . . . . . . . . . — — 35,574,549 3,415,606 38,990,155Kellogg, Remington and Marguerite, Memorial . . . . . . . . . . . . . . . . . — 364,911 — 223,178 588,089Kottler, Howard, Endowment for Ceramic Art . . . . . . . . . . . . . . . . . . — 3,463 18,882 75,000 97,345Kramar, Nada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 21,030 7,974 12,103 41,107Krombein, Karl V. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 8,709 14,653 52,180 75,542Lang, Hank and Ru . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 5,708 200,000 205,708Lang, Hank and Ru, Educational . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 30,605 — 117,723 148,328Lichtenberg, William R. & Nora H. . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — 50,000 50,000Mandil, Harry and Beverly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 62,969 100,000 162,969Mashantucket Pequot Nation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 89,253 500,000 589,253Maxwell, Mary E. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 163,368 44,128 20,000 227,496Mellon Foundation-Advanced Studies in Plant Science Research . . . — — — 1,150,000 1,150,000Mellon Foundation Challenge Grant/Endowment . . . . . . . . . . . . . . . — 613,372 — 655,465 1,268,837Mellon Publications Endowment Fund . . . . . . . . . . . . . . . . . . . . . . . . — 288,155 285,933 900,000 1,474,088Milliken, H. Oothout, Memorial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 2,379 — 443 2,822Mineral Endowment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 844,834 179,008 1,023,842Mitchell, William A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 115,694 — 24,072 139,766

102


Market Values


DONOR DESIGNATED PURPOSE - TRUE: (Continued)

Moynihan, Elizabeth Brennan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 16,598 50,161 66,759Museum of the American Indian-Heye Foundation . . . . . . . . . . . . . . — 706,499 — 920,587 1,627,086NMAI Educational Endowment Fund (See Note 1) . . . . . . . . . . . . . . . — 50,630 — 273,047 323,677NMAI George Heye Center (See Note 1) . . . . . . . . . . . . . . . . . . . . . . . . — — — 533,500 533,500Nelms, Henning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 173,743 — 218,001 391,744Nelson, Edward William . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 177,648 49,971 30,000 257,619Nesbitt, Lowell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 8,863 20,000 28,863Petrocelli, Joseph, Memorial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 76,291 10,000 86,291Reid, Addison T. (See Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 211,950 20,561 232,511Ripley, S. Dillion and Mary Livingston . . . . . . . . . . . . . . . . . . . . . . . . — 223,044 63,491 197,080 483,615Roebling Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 1,241,647 150,000 1,391,647Rollins, Miriam and William . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 2,401,213 — 691,493 3,092,706Sackler, Else, Flower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 37,146 398,237 435,383Sackler Public Affairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 1,293,826 2,856,875 4,150,701Schmitt, John J. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 14,442 — 18,817 33,259The Sichel Family, Endowment for Research at the NZP . . . . . . . . . . — 8,334 33,749 400,000 442,083Sims, George W. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 193,515 — 110,000 303,515Sisley, George J. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 22,782 154,980 926,650 1,104,412Sprague Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 13,539,840 — 4,949,996 18,489,836Springer, Frank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 137,383 40,281 30,000 207,664Star Spangled Banner (See Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — 100,000 100,000Stern, Harold P., Memorial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1,140,304 384,662 458,101 1,983,067Stevenson, John A., Mycological Library . . . . . . . . . . . . . . . . . . . . . . . — 35,677 11,005 10,053 56,735Stuart, Mary Horner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 429,426 291,426 720,852Tupper, Earl S. (See Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1,439,423 — 6,725,650 8,165,073Walcott, Charles D.and Mary Vaux, Research . . . . . . . . . . . . . . . . . . . — 1,521,134 — 574,743 2,095,877Walcott Research Fund, Botanical Publications . . . . . . . . . . . . . . . . . — 622,274 — 80,124 702,398Wells, Dr. John W. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 2,211 4,577 6,788Wetmore, Alexander, Fund for Ornithology (See Note 1) . . . . . . . . . — — — 448,868 448,868Williams, Blair and Elsie . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 30,408 — 39,622 70,030Williston, Samuel Wendell, Diptera Research . . . . . . . . . . . . . . . . . . . — 26,887 12,895 32,942 72,724Wineland Research Library . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 123 41,160 41,283Woolfenden, William J. (See Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . — — — 126,127 126,127Wood, Elizabeth B. and Laurence I. (See Note 1) . . . . . . . . . . . . . . . . — — — 209,685 209,685Zerbee, Frances Brinckle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 7,801 2,118 1,000 10,919Zirkle, Nancy Behrend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 30,014 — 117,868 147,882

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 36,668,364 135,025,558 58,596,509 230,290,431

DONOR DESIGNATED PURPOSE - QUASI:

Abbott, Marie Bohrn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 282,895 — — 282,895Archives of American Art . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 505,552 — — 505,552Armstrong, Edwin James . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 52,651 — — 52,651Au Panier Fleuri . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 199,797 — — 199,797Bacon, Virginia Purdy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 964,435 — — 964,435Bateman, Robert . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 71,003 91,248 — 162,251Becker, George F. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1,669,257 — — 1,669,257The Cafritz Foundation Fund (See Note 1) . . . . . . . . . . . . . . . . . . . . . — 494 500,000 — 500,494Compton, Bertita E. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 25,020 286,820 — 311,840Compton, Bertita E., Memorial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 3,642 32,000 — 35,642Cooper Hewitt Acquisition Endowment Fund . . . . . . . . . . . . . . . . . . — 828,028 — — 828,028Daniziger, Richard (See Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 500,000 — 500,000Davis, Gene, Memorial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 411,322 — — 411,322Denghausen, Luisita L. and Franz H. . . . . . . . . . . . . . . . . . . . . . . . . . . — 18,358,871 308,906 — 18,667,777Desautels, Paul E. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 30,642 — — 30,642Evans, Richard T. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (6,160) 68,137 — 61,977Friends of Music Endowment Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . — 200,490 — — 200,490Gaver, Gordon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 27,543 — — 27,543Haas, Gloria, Fellowship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 13,227 26,329 — 39,556Hachenbergh, George P. and Caroline . . . . . . . . . . . . . . . . . . . . . . . . . — 50,740 — — 50,740Hagen, Karl (See Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 240,655 — 240,655Hammond, John Performance Series Fund . . . . . . . . . . . . . . . . . . . . — 536,993 — — 536,993Hanson, Martin Gustav and Caroline R. . . . . . . . . . . . . . . . . . . . . . . . — 105,530 — — 105,530Hirshhorn Collections Endowment Fund . . . . . . . . . . . . . . . . . . . . . . — 14,029,723 — — 14,029,723Hirshhorn, Joseph H., Bequest Fund . . . . . . . . . . . . . . . . . . . . . . . . . . — 2,683,656 — — 2,683,656The Holenia Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 8,964,344 — — 8,964,344The Holenia Trust Fund II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 3,838,335 — — 3,838,335

103


Market Values


DONOR DESIGNATED PURPOSE - QUASI: (Continued)

The Holenia Trust Fund III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1,288,711 — — 1,288,711Houchins, Lee and Chang-Su (See Note 1) . . . . . . . . . . . . . . . . . . . . . — — 74,017 — 74,017Hunterdon Endowment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 36,110,132 — — 36,110,132Johnson, E.R. Fenimore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 78,135 — — 78,135Johnson, Janet W. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (9,847) 125,000 — 115,153Keyzer-Andre, Henri, Conservation Internship . . . . . . . . . . . . . . . . . . — 4,477 144,893 — 149,370Krieg Drawings & Prints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 714 25,000 — 25,714Lane, Robert and Mildred Katchmar . . . . . . . . . . . . . . . . . . . . . . . . . . — 392,035 — — 392,035Leob, Morris . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1,046,621 — — 1,046,621Long, Annette E. and Edith C. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 6,464 — — 6,464Louie, Richard Memorial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 99,317 — — 99,317McGovern, John P. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 25,101 87,798 — 112,899McLaughlan, Thomas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 137,855 — — 137,855Merrell, Elinor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 544,968 60,469 — 605,437Myer, Catherine Walden . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 239,871 — — 239,871Noyes, Frank B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 12,090 — — 12,090Noyes, Pauline Riggs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 98,066 — — 98,066Orth, Edward J., Memorial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 2,523 23,354 — 25,877Pell, Cornelia Livingston . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 88,553 — — 88,553Plumb, Henry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 221,470 — — 221,470Ramsey, Adm. and Mrs. Dewitt Clinton . . . . . . . . . . . . . . . . . . . . . . . . — 1,868,548 — — 1,868,548Rathbun, Richard, Memorial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 126,881 — — 126,881Reeves, Douglas F. and Sanae Iida (See Note 1) . . . . . . . . . . . . . . . . . . — — 186,258 — 186,258Ripley, S. Dillon Library . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 243,788 168,218 — 412,006Roebling Solar Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 272,797 — — 272,797Ross, Arthur Garden and Terrace . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 293,870 618,474 — 912,344Ruef, Bertha M. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 304,493 — — 304,493Schultz, Leonard P. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 250,334 — — 250,334Seidell, Atherton . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 6,594,930 — — 6,594,930Smithsonian Institution Libraries . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 520,421 15,627 — 536,048Strong, Julia D. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 119,227 — — 119,227Witherspoon, Thomas A., Memorial . . . . . . . . . . . . . . . . . . . . . . . . . . — 1,529,836 — — 1,529,836

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 106,360,411 3,583,203 — 109,943,614

Total Donor Designated Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 143,028,775 138,608,761 58,596,509 340,234,045

BOARD DESIGNATED PURPOSE - TRUE:

Walcott, Charles D. and Mary Vaux, Research . . . . . . . . . . . . . . . . . . . — 4,753,991 — 574,182 5,328,173

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 4,753,991 — 574,182 5,328,173

BOARD DESIGNATED PURPOSE - QUASI:

Abbott, William L. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1,415,752 — — 1,415,752Barstow, Fredric D. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 11,833 — — 11,833Cooper Hewitt Masters Program for Education . . . . . . . . . . . . . . . . . . — 238,118 — — 238,118Heckscher, August, Exhibition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 165,087 — — 165,087Hirshhorn Museum Acquisition Fund . . . . . . . . . . . . . . . . . . . . . . . . . — 4,003,883 — — 4,003,883Jackson, Charles Bremner Hogg . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 2,166,918 — — 2,166,918Lindbergh Chair of Aerospace History . . . . . . . . . . . . . . . . . . . . . . . . . — 4,903,372 — — 4,903,372Lindbergh, Charles A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 78,944 — — 78,944Lyon, Marcus Ward, Jr. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 53,703 — — 53,703Martin Marietta Internship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 352,345 — — 352,345NMNH Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 232,662 — — 232,662NZP Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 4,619,930 — — 4,619,930SAO Directors Endowment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 247,236 — — 247,236Smithsonian Institution Libraries General Support . . . . . . . . . . . . . . — 29,158 — — 29,158Smithsonian Press Scholarly Books Fund . . . . . . . . . . . . . . . . . . . . . . — 3,436,092 — — 3,436,092Webb, James E., Fellowship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 2,283,094 — — 2,283,094Women’s Committee Fellowship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 492,924 — — 492,924

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 24,731,051 — — 24,731,051

Total Board Designated Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 29,485,042 — 574,182 30,059,224

TOTAL ENDOWMENT AND SIMILAR ACTIVITIES . . . . . . . . . . . . . . . . . 215,093,927 172,513,817 138,686,129 64,926,717 591,220,590

Note 1: Invested all or in part in nonpooled investments

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Table 6. Construction and Plant Funds, Fiscal Years 1998 and 1997 (in $000s)

FY 1998 FY 1997

FUNDS PROVIDEDFederal Construction Appropriations:

National Zoological Park . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,850 3,850Repair and Restoration of Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,000 39,000Construction Planning and Minor Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 3,000National Museum of the American Indian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,000 4,000National Air and Space Museum Dulles Extension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000 3,000

Total Federal Construction Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68,850 52,850

Nonappropriated Trust Plant Funds:Income - Gift and Other

Cooper - Hewitt, National Design Museum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,400 1,670National Museum of the American Indian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,477 4,629National Museum of Natural History - Gem Hall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 359 963National Air and Space Museum Dulles Extension. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 500

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 13

Total Trust Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,246 7,775

Total Funds Provided . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74,096 60,625

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Independent Auditors’ Report

B OA R D O F R E G E N T SS M I T H S O N I A N I N S T I T U T I O N:

We have audited the accompanying statement of financialposition of the Smithsonian Institution (Smithsonian) as ofSeptember 30, 1998, and the related statements of financialactivity and cash flows for the year then ended. These financialstatements are the responsibility of the Smithsonian’smanagement. Our responsibility is to express an opinion onthese financial statements based on our audit.

We conducted our audit in accordance with generally ac-cepted auditing standards. Those standards require that we planand perform the audit to obtain reasonable assurance aboutwhether the financial statements are free of material misstate-ment. An audit includes examining, on a test basis, evidence

supporting the amounts and disclosures in the financial state-ments. An audit also includes assessing the accounting princi-ples used and significant estimates made by management, aswell as evaluating the overall financial statement presentation.We believe that our audit provides a reasonable basis for ouropinion.

In our opinion, the financial statements referred to abovepresent fairly, in all material respects, the financial position ofthe Smithsonian Institution as of September 30, 1998, and itschanges in net assets and its cash flows for the year then ended,in conformity with generally accepted accounting principles.

Washington, D.C.KPMG LLPJanuary 13, 1999

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SMITHSONIAN INSTITUTIONStatement of Financial Position September 30, 1998 (in thousands)

Total FundsTrust Federal

Funds Funds 1998 1997

Assets:Cash and balances with the U.S. Treasury $ 5,193 200,636 205,829 197,048Receivables and advances (note 3) 69,460 16,066 85,526 69,529Prepaid and deferred expenses (note 2) 15,663 — 15,663 16,956Other assets (note 5) 4,300 — 4,300 4,300Inventory 20,254 921 21,175 18,959Investments (note 6) 646,455 — 646,455 609,660Property and equipment, net (note 9) 119,739 440,103 559,842 516,496Collections (note 5) — — — —

Total assets $ 881,064 657,726 1,538,790 1,432,948

Liabilities:Accounts payable and accrued expenses $ 35,790 34,080 69,870 69,512Net payable for investment securities purchased 24,963 — 24,963 1,001Deferred revenue 50,505 — 50,505 53,602Debt (note 10) 41,526 — 41,526 1,000Deposits held for affiliates (note 11) 4,864 — 4,864 3,933Accrued annual leave 4,984 14,752 19,736 19,290Unexpended federal appropriations — 182,623 182,623 173,800

Total liabilities 162,632 231,455 394,087 322,138

Net assets:Unrestricted:

Funds functioning as endowments (note 7) 387,608 — 387,608 404,005Operational balances 63,673 426,271 489,944 471,377

Total unrestricted net assets 451,281 426,271 877,552 875,382

Temporarily restricted:Funds functioning as endowments (note 7) 138,686 — 138,686 149,089Donor contributions for ongoing programs 63,538 — 63,538 29,877

Total temporarily restricted net assets 202,224 — 202,224 178,966

Permanently restricted:True endowment (note 7) 62,972 — 62,972 54,560Interest in perpetual and other trusts 1,955 — 1,955 1,902

Total permanently restricted net assets 64,927 — 64,927 56,462

Total net assets 718,432 426,271 1,144,703 111,0810

Commitments and contingencies (note 12)Total liabilities and net assets $ 881,064 657,726 1,538,790 1,432,948

See accompanying notes to the financial statements.

SMITHSONIAN INSTITUTIONStatement of Financial Activity For the Year Ended September 30, 1998 (In thousands)

UnrestrictedTemporarily Permanently Total

Trust Federal Restricted RestrictedFunds Funds Total Trust Funds Trust Funds 1998 1997

Operating revenue:Government funding and other revenue:

Federal appropriations $ — 393,032 393,032 — — 393,032 383,468Government grants and contracts 57,320 — 57,320 — — 57,320 56,703Short-term investment income (note 8) 2,374 — 2,374 6 — 2,380 1,924Endowment payout (note 8) 13,208 — 13,208 6,059 459 19,726 18,174Private grants 5,682 — 5,682 7,318 — 13,000 7,708Rentals, fees, and commissions 8,335 — 8,335 — — 8,335 14,055Auxiliary activities (note 15) 213,109 — 213,109 — — 213,109 202,467

Total government funding and other revenue 300,028 393,032 693,060 13,383 459 706,902 684,499

Contributions:Program support 27,888 — 27,888 27,851 8,003 63,742 37,924Construction of facilities — — — 3,815 — 3,815 6,422

Total contributions 27,888 — 27,888 31,666 8,003 67,557 44,346

Total operating revenue and support 327,916 393,032 720,948 45,049 8,462 774,459 728,845Net assets released from restrictions 12,170 — 12,170 (12,170) — — —

Total operating revenue, support and other additions 340,086 393,032 733,118 32,879 8,462 774,459 728,845

Expenses:

Research 73,953 127,644 201,597 — — 201,597 190,042Collections management 2,729 57,128 59,857 — — 59,857 56,545Education, public programs, and exhibitions 30,506 77,304 107,810 — — 107,810 130,158Auxiliary activities (note 15) 196,990 — 196,990 — — 196,990 183,369Administration 25,950 98,984 124,934 — — 124,934 122,471Advancement 10,459 — 10,459 — — 10,459 9,353

Total expenses 340,587 361,060 701,647 — — 701,647 691,938

Increase (decrease) in net assets from operations (501) 31,972 31,471 32,879 8,462 72,812 36,907

Endowment return in excess of (less than) payout (note 8) (21,207) — (21,207) (9,621) 3 (30,825) 109,283

Change in net assets related to collection items not capitalized(note 5):

Proceeds from sale 737 — 737 — — 737 2,719Collection items purchased (6,938) (1,893) (8,831) — — (8,831) (9,358)

Increase (decrease) in net assets (27,909) 30,079 2,170 23,258 8,465 33,893 139,551

Net assets, beginning of the year 479,190 396,192 875,382 178,966 56,462 1,110,810 971,259Net assets, end of the year $ 451,281 426,271 877,552 202,224 64,927 1,144,703 1,110,810


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SMITHSONIAN INSTITUTIONStatement of Cash Flows For the Year ended September 30, 1998 (In thousands)



Cash flows from operating activities:Increase in net assets $ 3,814 30,079 33,893 139,551Adjustments to reconcile increase in net assets to net

cash provided by operating activities:Proceeds from sales of collections (737) — (737) (2,719)Collection items purchased 6,938 1,893 8,831 9,358Depreciation 7,388 38,493 45,881 37,938Loss on disposition of assets 364 219 583 1,339Contributions for increases in endowment (4,822) — (4,822) (2,916)Contributions for construction of property (3,815) — (3,815) (6,422)Appropriations for repair, restoration and construction — (68,850) (68,850) (52,850)

Investment income restricted for long-term investment (462) — (462) (419)Provision for doubtful accounts 277 — 277 792Net realized and unrealized loss (gain) on investments 26,505 — 26,505 (107,160)Decrease (increase) in assets:

Receivables and advances (18,325) (1,698) (20,023) (9,564)Prepaid and deferred expenses 1,293 — 1,293 6,603Other assets — — — (300)Inventory (2,133) (83) (2,216) 1,268

SMITHSONIAN INSTITUTIONStatement of Cash Flows For the Year ended September 30, 1998 (In thousands)



Adjustments to reconcile net increase in net assets to netcash provided by operating activities: (continued)

Increase (decrease) in liabilities:Accounts payable and accrued expenses (299) 657 358 5,586Net payable for investment securities purchased 23,962 — 23,962 (16,635)Deferred revenue (3,097) — (3,097) 2,555Deposits held for others 931 — 931 (2,950)Accrued annual leave 169 277 446 (1,489)Unexpended federal appropriations — 8,823 8,823 (9,920)

Net cash provided from operating activities 37,951 9,810 47,761 (8,354)

Cash flows from investing activities:Proceeds from sales of collections 737 — 737 2,719Collection items purchased (6,938) (1,893) (8,831) (9,358)Purchase of property and equipment (20,824) (68,986) (89,810) (90,789)Purchases of investment securities (750,907) — (750,907) (865,439)Proceeds from the sales of investment securities 687,607 — 687,607 901,596

Net cash used in investing activities (90,325) (70,879) (161,204) (61,271)

Cash flows from financing activities:Contributions for increases in endowment $ 8,571 — 8,571 7,605Contributions for construction of property 3,815 — 3,815 6,422Appropriations for repair, restoration and construction — 68,850 68,850 52,850Investment income restricted for long-term purpose 462 — 462 419Proceeds from issuance of debt 40,526 — 40,526 500Repayments of debt — — — (2,597)

Net cash provided from financing activities 53,374 68,850 122,224 65,199

Net increase (decrease) in cash and balances with the U.S. Treasury 1,000 7,781 8,781 (4,426)Cash and balances with the U.S. Treasury:

Beginning of the year 4,193 192,855 197,048 201,474

End of the year $ 5,193 200,636 205,829 197,048

Cash paid for interest during fiscal years 1998 and 1997 was $1,332,000 and $58,000, respectively.


(1) Organization

The Smithsonian Institution was created by act of Congress in 1846 in accordance with theterms of the will of James Smithson of England, who, in 1826, bequeathed his property tothe United States of America “to found at Washington, under the name of the SmithsonianInstitution, an establishment for the increase and diffusion of knowledge among men.”After receiving the property and accepting the trust, Congress vested responsibility in theSmithsonian Board of Regents (Board) to administer the trust.

The Smithsonian Institution (Smithsonian) is a museum, education and research com-plex of 16 museums and galleries, the National Zoological Park, and other research facili-ties. Research is carried out in the Smithsonian’s museums and facilities throughout theworld. The Smithsonian’s extensive collections number over 140 million objects. Duringfiscal year 1998, over 28 million individuals visited the Smithsonian museums and otherfacilities.

The Smithsonian receives its funding from federal appropriations, private gifts andgrants, government grants and contracts, investment income, and various businessactivities, including the Smithsonian magazines and other publications, a mailorder cata-logue, museum shops, and food services. A substantial portion of the Smithsonian’s an-nual operating budget is funded from annual federal appropriations. Certain constructionprojects have been completely funded from federal appropriations, while others arefunded using amounts raised from private sources, or by a combination of federal and pri-vate funds.

Federal operating and construction funding are both subject to the annual federal ap-

propriations process, and therefore the potential exists for reductions in approved federalfunding that would significantly impact the Smithsonian’s operations.

These financial statements do not include the accounts of the National Gallery of Art,the John F. Kennedy Center for the Performing Arts, or the Woodrow Wilson InternationalCenter for Scholars, which were established by Congress within the Smithsonian, but areadministered by independent boards of trustees.

(2) Summary of Significant Accounting Policies

These financial statements present the financial position, financial activity, and cash flowsof the Smithsonian on the accrual basis of accounting. Funds received from direct federalappropriations are reported as Federal Funds in the financial statements. All other fundsare reported as Trust Funds.

(a) Trust FundsAll non-appropriated activities are classified as trust funds, income from which arises pri-marily from contributions, grants and contracts, net investment income, and auxiliary ac-tivities. Trust net assets are classified and reported as follows:

Unrestricted net assetsNet assets that are not subject to any donor-imposed or other legal stipulations on the useof the funds. Funds functioning as endowments in this category represent unrestricted as-sets which have been designated by management or the Board for longterm investment.

108

Temporarily restricted net assetsNet assets subject to donor-imposed stipulations on the use of the assets that may be metby actions of the Smithsonian and/or the passage of time. Funds functioning as endow-ments in this category represent donor-restricted contributions that have been designatedby management or the Board for longterm investment. Donor contributions represent un-spent gifts and promises-to-give of cash and securities subject to donor-imposed restric-tions which have not yet been met.

Permanently restricted net assetsNet assets subject to donor-imposed stipulations that the principal be maintainedpermanently by the Smithsonian. Generally, the donors of these assets permit the Smith-sonian to use all or part of the income earned on investment of the assets for either generalor donor-specified purposes.

(b) Federal FundsThe Smithsonian receives federal appropriations to support the Smithsonian’s operatingsalaries and expenses, repair and restoration of facilities, and construction. Federal appro-priation revenue is classified as unrestricted and recognized as an exchange transaction asexpenditures are incurred. The liability reported as unexpended appropriations representeither goods and services that have been ordered but not yet received or appropriatedfunds that have not yet been obligated.

The Smithsonian received appropriations for operations of $333,408,000 in fiscalyear 1998. Federal appropriations for operations are generally available for obligation onlyin the year received. In accordance with Public Law 101-510, these annual appropriationsare maintained by the Smithsonian for five years following the year of appropriation, afterwhich the appropriation account is closed and any unexpended balances are returned tothe U.S. Treasury. During fiscal year 1998, the Smithsonian returned $2,193,000 to theU.S. Treasury which represents the unexpended balance for fiscal year 1993.

Federal appropriations for repair and restoration of facilities and construction are gener-ally available for obligation until expended.

(c) Use of EstimatesThe preparation of financial statements in conformity with generally accepted accountingprinciples requires management to make estimates and assumptions that affect the re-ported amounts of assets and liabilities and disclosure of contingent assets and liabilities atthe date of the financial statements and the reported amounts of revenues and expensesduring the reporting period. Actual results could differ from those estimates, however,management does not believe that actual results will be materially different from those es-timates.

(d) Fair Value of Financial InstrumentsThe carrying value of financial instruments in the financial statements approximates fairvalue.

(e) Cash and Balances with U.S. TreasuryAmounts represent cash deposited with financial institutions, balances held by the U.S.Treasury that are available for disbursement, and a repurchase agreement totaling$7,810,000 at September 30, 1998.

(f ) InvestmentsThe Smithsonian’s marketable equity and debt securities are reported at fair value based onquoted market prices. Changes in fair value are recognized in the statement of financialactivity. Purchases and sales of investments are recorded on the trade date. Investment in-come is recorded when earned, and realized gains and losses on the sale of investments arerecognized on the trade date basis using the average cost method. As mandated by Con-gress, the Smithsonian maintains two $500,000 Treasury investments relating to the origi-nal James Smithson gift.

(g) Contributions ReceivableContributions receivable that are expected to be collected within one year are reported netof any estimated uncollectible amounts. Contributions expected to be collected beyondone year are also discounted to present value. Conditional contributions receivable are notrecorded until material conditions have been met.

(h) InventoriesInventories are reported at the lower of cost or market, and consist primarily ofmerchandise inventory, books, recordings, and office supplies. Cost is determined usingthe first-in, first-out method.

(i) Deferred Revenue and ExpenseRevenue from subscriptions to Smithsonian magazine and Air & Space/Smithsonianmagazine is recognized over the period of the subscription, generally one year.

Promotion production expenses are recognized when related advertising materials arereleased. Direct-response advertising relating to the magazines is deferred and amortizedover one year. At September 30, 1998, prepaid and deferred expenses include $5,403,000of deferred promotion costs, mostly related to the Smithsonian magazine. Promotion ex-pense totaled $15,475,000 in fiscal year 1998.

(j) Split Interest Agreements and Perpetual TrustsSplit interest agreements with donors consist primarily of irrevocable charitable remaindertrusts and charitable gift annuities. For the charitable remainder trusts, contribution rev-enue and assets are recognized at fair value on the date the trusts are established. Assets areadjusted during the term of the trusts for changes in the value of the assets, accretion ofdiscounts, and other changes in the estimated future benefits. For the charitable gift annu-ities, assets are recognized at fair value on the date the annuity agreements are established.An annuity liability is recognized at the present value of future cash flows expected to bepaid to the donor and contribution revenue is recognized as the difference between the as-sets and liability. Liabilities are adjusted during the term of the annuities for payments todonors, accretion of discounts and changes in the life expectancy of the donor.

The Smithsonian is also the beneficiary of certain perpetual trusts held and adminis-tered by others. The present values of the estimated future cash receipts from the trusts arerecognized as assets and contribution revenue at the dates the trusts are established. Distri-butions from the trusts are recorded as contributions and the carrying value of the assets isadjusted for changes in the estimates of future receipts.

(k) Property and EquipmentProperty and equipment purchased with federal or trust funds are capitalized at cost. Prop-erty and equipment acquired through transfer from government agencies are capitalized atnet book value or fair value, whichever is more readily determinable. Property and equip-ment acquired through donation are capitalized at appraised value at the date of the gift.These assets are depreciated on a straight-line basis over their estimated useful lives as fol-lows:

Buildings 30 yearsMajor renovations 15 yearsEquipment 3–10 years

Certain lands occupied by the Smithsonian’s buildings, primarily located in the District ofColumbia, Maryland and Virginia, were appropriated and reserved by Congress for theSmithsonian’s use. The Smithsonian serves as trustee of these lands for as long as they areused to carry out the Smithsonian’s mission. These lands are titled in the name of the U.S.government and are not reflected in the accompanying financial statements.

(l) CollectionsThe Smithsonian acquires its collections, which include works of art, library books, photo-graphic archives, objects and specimens, by purchase using federal or trust funds or by do-nation. All collections are held for public exhibition, education, or research, furtheringthe Smithsonian’s mission to increase and diffuse knowledge to the public. The Smith-sonian protects and preserves its collections, which total more than 140million items. The Smithsonian’s Collections Management policy includes guidance onthe preservation, care and maintenance of the collections and procedures relating to theaccession/deaccession of items within the collections.

The Smithsonian’s policy is to not capitalize its collections, therefore, no value isassigned to the collections on the statement of financial position. Purchases of collectionitems are recorded as expense in the year in which the items are acquired. Contributed col-lection items are not reflected in the financial statements. Proceeds from deaccessions orinsurance recoveries from lost or destroyed collection items are reflected as increases in theappropriate net asset class, and are designated for future collection acquisitions.

Items that are acquired with the intent at the time of acquisition not to add them to thecollections but rather to sell, exchange, or otherwise use them for financial gain are notconsidered collection items, and are recorded at fair market value at date of acquisition asother assets in the statement of financial position.

(m) Annual LeaveThe Smithsonian’s civil service employees earn annual leave in accordance with federallaws and regulations. Separate rules apply for trust employees. Annual leave for all em-ployees is recognized as expense when earned.

(n) Government Grants and ContractsThe Smithsonian receives grants and enters into contracts with the U.S. government andstate and local governments, which primarily provide for cost reimbursement to the Smith-sonian. Revenue from governmental grants and contracts is classified as unrestricted andis recognized as reimbursable expenditures are incurred.

(o) ContributionsThe Smithsonian recognizes revenue from all contributions as revenue in the period un-conditional promises are received.

Unrestricted contributions with payments due in future periods are initially recorded astemporarily restricted support, and are reclassified to unrestricted net assets when pay-ments become due.

When donor restrictions are met on temporarily restricted contributions, the related netassets are reclassified as released from restrictions in the accompanying statement of finan-cial activity.

Gifts of long-lived assets are recorded as unrestricted revenue in the period received.Contributions of cash and other assets restricted to the acquisition of longlived assets are

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recorded as temporarily restricted revenue in the period received. The donor’s restrictionsexpire and the related net assets are released from restriction when the long-lived asset isplaced in service by the Smithsonian.

In-kind contributions of goods and services totaling $6,310,000 were received in fiscalyear 1998 and recorded as program support in the accompanying statement of financial ac-tivity. The nature of the in-kind contributions primarily includes donated space and inter-active multimedia software programs.

A substantial number of volunteers also make significant contributions of time to theSmithsonian, enhancing its activities and programs. In fiscal year 1998, more than 5,600volunteers contributed over 496,000 hours of service to the Smithsonian. The value ofthese contributions is not recognized in the financial statements.

(p) AdvancementThe Smithsonian raises private financial support from individual donors, corporations andfoundations to fund programs and other initiatives. Funds are also generated through nu-merous membership programs. Fund-raising costs are expensed as incurred and reported asadvancement expense in the statement of financial activity. Membership program costs areamortized over membership terms, typically one year, and are also reported as Advance-ment expenses.

(q) Comparative Financial StatementsThe statement of financial activity includes certain prior-year summarized comparative in-formation in total but not by net asset class. Such information does not include sufficientdetail to constitute a presentation in conformity with generally accepted accounting princi-ples. Accordingly, such information should be read in conjunction with the Smithsonian’sfinancial statements for the year ended September 30, 1997, from which the summarized in-formation was derived.

(r) ReclassificationsCertain amounts have been reclassified in prior year to conform with the current year pre-sentation.

(3) Receivables and Advances

Receivables and advances consisted of the following at September 30, 1998:

110

Trust Federal Total

Auxiliary activities, net of $1,590,000 in allowances $ 18,011 — 18,011 Contributions receivable, net 33,789 — 33,789 Grants and contracts 13,264 — 13,264 Interest and dividends due 660 — 660 Advance payments 1,171 16,066 17,237 Charitable trust 2,565 — 2,565

Total receivables and advances $ 69,460 16,066 85,526

($000s)

($000s)

Due within:Less than 1 year $ 14,079 1 to 5 years 21,596 More than 5 years 5,964

41,639

Less:Allowance for uncollectible pledges (4,356) Discount to present value (3,494)

Contributions receivable, net $ 33,789

(a) Contributions ReceivableContributions receivable (pledges) are recorded as revenue when received. Pledges forwhich payment is not due within one year are discounted based on United States Treasuryrisk-free obligation rates according to their corresponding terms. As of September 30, 1998,the aggregate discounted contributions receivable was as follows:

At September 30, 1998, the Smithsonian has outstanding conditional contributions total-ing $14,000,000 which will be recognized when the specific conditions are met.

(b) Advance PaymentsAt September 30, 1998, federal advance payments of $16,066,000 represent prepaymentsmade to government agencies, educational institutions, firms and individuals for services to be rendered, or property or materials to be furnished.

At September 30, 1998, Smithsonian advance payments included amounts paid to theGeneral Services Administration of $8,512,000 for equipment purchases for the MuseumSupport Center and other projects to be completed in future years.

(4) Reconciliation of Federal AppropriationsFederal appropriation revenue recognized in fiscal year 1998 can be reconciled to the fed-eral appropriations received in fiscal year 1998 as follows:

Federal expenses recognized in fiscal year 1998 can be reconciled to the federal appropria-tions received in fiscal year 1998 as follows:

Repair and Salaries and Restoration and

Expenses Construction Total

Federal appropriation revenue $ 331,484 61,548 393,032 Unexpended 1998 appropriation 49,723 68,850 118,573 Amounts expended from prior years (46,724) (61,548) (108,272) Other funding (1,075) — (1,075)

Fiscal year 1998 federalappropriations $ 333,408 68,850 402,258

($000s)

Repair and

Salaries and Restoration and Expenses Construction Total

Federal expenses $ 331,426 31,527 362,953 Unexpended 1998 appropriation 49,723 68,850 118,573 Depreciation (6,966) (31,527) (38,493)Supplies consumption 82 — 82 Loss on disposition of assets (219) — (219) Unfunded annual leave (277) — (277) Amounts expended from prior years (46,724) (61,548) (108,272)Capital expenditures 7,438 61,548 68,986 Other funding (1,075) — (1,075)

Fiscal year 1998 federalappropriations $ 333,408 68,850 402,258

($000s)

($000s)Short-term investments:

Cash equivalents $ 16,407 U.S. Government obligations 24,625

41,032

Endowment and similar investments:Pooled investments:

Cash equivalents 5,270 U.S. Government and quasi-government obligations 55,731 Corporate bonds and other obligations 169,779 Common and preferred stocks 373,146

Total pooled investments 603,926

Nonpooled investments:Deposits with U.S. Treasury 1,050

Total endowment and similar investments 604,976

Gift annuity program investments:Corporate bonds and other obligations 140 Common and preferred stock 307

447

Total investments $ 646,455

Federal unrestricted net assets primarily represent the Smithsonian’s net investment inproperty, plant and equipment purchased with or constructed using federal appropriatedfunds.

Unexpended appropriations for all fiscal years total $182,623,000 at September 30, 1998,and consist of $73,332,000 in unexpended operating funds and $109,291,000 in unex-pended repair and restoration and construction funds. Unexpended operating funds in-clude amounts for the Museum Support Center move and the National Museum of theAmerican Indian. Unexpended repair and restoration funds represent amounts availablefor on-going major repair and restoration of the Smithsonian’s museums and facilities.Unexpended construction funds represent amounts appropriated but not yet expended forconstruction of new facilities.

(5) Accessions and Deaccessions

For fiscal year 1998, $6,938,000 of trust funds and $1,893,000 of federal funds were spentto acquire collection items. Proceeds from trust fund deaccessions were $737,000. Therewere no deaccessions of collection items purchased with federal funds in fiscal year 1998.At September 30, 1998, accumulated proceeds and related earnings from deaccessions of$16,269,000 were designated for collections acquisition in the trust funds.

Non-cash deaccessions result from the exchange, donation, or destruction of collectionitems, and occur because objects deteriorate, are beyond the scope of a museum’s mission,or are duplicative. During fiscal year 1998, the Smithsonian’s noncash deaccessions in-cluded works of art, animals, historical objects, and natural specimens. Contributed itemsheld for sale total $4,300,000 and are reported as other assets in the statement of financialposition.

(6) Investments

At September 30, 1998, investments consisted of the following:

($000s)

($000s)

Salaries andExpenses

Repair andRestoration and

Construction Total

Salaries andExpenses

Repair andRestoration and

Construction Total

Trust Federal Total

(7) True Endowment and Funds Functioning as Endowments

The Smithsonian uses the “total return” approach to investment management of pooledtrue endowment funds and quasi-endowment funds, referred to collectively as the endow-ment. Each year, the endowment pays out an amount for current expenditures based upona number of factors evaluated and approved by the Board of Regents. The payout for 1998was 4.5 percent of the average market value of the endowment over the prior five years.The difference between the total return (i.e., dividends, interest and net gains), and the pay-out is reinvested when there is an excess of total return over payout, or withdrawn frompreviously accumulated returns when there is a deficiency of total return to payout. Thepayout amount exceeded the total return in fiscal year 1998 and the deficit was withdrawnfrom the endowment asset pool. The withdrawal is reported as a non-operating loss in theaccompanying statement of financial activity (see note 8).

Substantially all of the investments of the endowment are pooled on a market value ba-sis, with individual funds subscribing to or disposing of units on the basis of the per unitmarket value at the beginning of the month in which the transaction takes place. At Sep-tember 30, 1998, each unit had a market value of $614. The market value of the pool’s netassets at September 30, 1998, was $579,444,000. This represents all pooled investmentsplus net receivables and payables related to investment transactions.

Each fund participating in the investment pool receives an annual payout equal to thenumber of units owned times the annual payout amount per unit. The payout for fiscalyear 1998 was $21.00 per unit. Based on approved Board policy, if the market value of anyendowment fund is less than 110 percent of the historical value, the current payout is lim-ited to the actual interest and dividends allocable to that fund.

Net asset balances of the endowment consisted of the following at September 30, 1998:

111

($000s)

Unrestricted $ 215,094 Unrestricted-designated 172,514

Total unrestricted 387,608

Temporarily restricted 138,686 Permanently restricted 62,972

Total endowment net assets $ 589,266

($000s)

Endowment payout $ 19,726 Payout in excess of investment income (2,171)

Total investment income 17,555

Less - investment fees (1,469)

Net investment income 16,086

Net realized and unrealized loss on investments (27,185)

Endowment total return $ (11,099)

($000s)

Interest and dividends $ 1,700 Net realized and unrealized gain on investments 680

Short-term investment total return $ 2,380

Trust Federal Total

Land $ 2,387 — 2,387 Buildings and capital improvements 159,668 818,325 977,993 Equipment 25,295 49,283 74,578 Leashold improvements 2,290 — 2,290

189,640 867,608 1,057,248 Accumulated depreciation (69,901) (427,505) (497,406)

Total property and equipment $ 119,739 440,103 559,842

($000s)

($000s)

Series 1997 Revenue Bonds, Serial, with principal amounts rangingfrom $800,000 to $1,225,000 interest rates ranging from 4.10%to 4.75%, maturing at various points from February 1, 2002through 2012 $ 10,950

Series 1997 Revenue Bonds, Term:Interest rate 5.00% due February 1, 2017 7,105 Interest rate 4.75% due February 1, 2018 1,640 Interest rate 5.00% due February 1, 2028 21,625

Total bonds at face value 41,320

Less – unamortized bond discount (794)

Total bonds payable $ 40,526

($000s)

1999 $ 13,066 2000 9,550 2001 9,291 2002 9,119 2003 8,240 Thereafter 29,549

Total $ 78,815

preciation expense for fiscal year 1998 totaled $38,493,000 in the federal funds and$7,388,000 in the trust funds.

(10) Debt

In January 1998, the District of Columbia issued $41.3 million of tax-exempt revenue bondson behalf of the Smithsonian. The Smithsonian is obligated under these bonds as follows:

(8) Composition of Total Return from Investments

Total return from investments consisted of the following for the year ended Septem-ber 30, 1998:

Composition of Endowment Return:

Endowment total return is reported as $19,726,000 in operating revenue and($30,825,000) in nonoperating endowment return in the statement of financial activity.

Composition of Short-Term Investment Total Return:

(9) Property and Equipment

Property and equipment consisted of the following at September 30, 1998:

The serial and term bonds represent an unsecured general obligation of the Smithsonian.Proceeds from the sale of the bonds will finance certain renovations of and improvementsto the National Museum of Natural History, fund capitalized interest, and pay certain costsof issuing the bonds. Interest on the bonds is payable semi-annually on August 1 and February 1, beginning on August 1, 1998. Principal and interestpayments will be funded solely through unrestricted Trust funds.

The term bonds maturing on February 1, 2017 and 2028 are subject to mandatoryredemption by operations of sinking fund installments. Installment payments for the termbond maturing February 1, 2017, begin on February 1, 2013 and range from $1,285,000 to$1,565,000 per year through the maturity date. Installment payments for the term bondmaturing February 1, 2028 begin on February 1, 2019 and range from $1,720,000 to$2,665,000 per year through the maturity date.

Interest expense on bonds payable for fiscal year 1998 totaled $1,332,000, net ofcapitalized interest of $173,000.

At September 30, 1998, the Smithsonian also had an interest-free loan from the VirginiaDepartment of Aviation totaling $1,000,000. The Virginia Department of Aviation agreed,in fiscal year 1995, to make available to the Smithsonian an interest-free loan facility total-ing $3 million, of which $500,000 was drawn in fiscal years 1996 and 1997. This loan facil-ity is intended to assist in the financing of the planning, marketing, fund-raising, and de-sign of the proposed National Air and Space Museum extension at Washington DullesInternational Airport. The Smithsonian is scheduled to repay the outstanding loan not laterthan June 30, 2000.

(11) Affiliate Relationships

The Smithsonian provides certain fiscal, procurement, facilities and administrative servicesto several separately incorporated affiliated organizations for which certain officials of theSmithsonian serve on the governing boards. The amounts paid to the Smithsonian bythese organizations for the above services totaled $164,000 of trust funds and $70,000 offederal funds for fiscal year 1998.

Deposits held in custody for these organizations at September 30, 1998, were $4,864,000and were recorded in the trust funds.

The Friends of the National Zoo (FONZ), an independent 501(c)(3) organization, raisesfunds for the benefit of the Smithsonian’s National Zoological Park. Funds received by theSmithsonian from FONZ are recorded as unrestricted revenue and totaled $548,000 in fiscalyear 1998.

(12) Commitments and Contingencies

(a) Leasing ActivitiesLeases for Smithsonian warehouse and office spaces provide for rent escalations to coincidewith increases in property taxes, operating expenses attributable to the leased property andthe Consumer Price Index. The Smithsonian has the authority to enter into leases for up to30 years using federal funds.

The Smithsonian’s operating leases for the warehouse and office spaces require futureminimum lease payments as follows:

At September 30, 1998, buildings and capital improvements included $28,135,000 and$125,296,000 of construction in progress within Trust and Federal funds, respectively. De- Rental expense for these operating leases totaled $15,516,000 for fiscal year 1998.

($000s)

($000s)

($000s)

($000s)

($000s)

Trust Federal Total

(b) Government Grants and ContractsThe Smithsonian receives funding or reimbursement from governmental agencies for vari-ous activities which are subject to audit. Audits of these activities have been completedthrough fiscal year 1997, however, fiscal year 1997 has not been closed with the cognizantfederal audit agency. Management believes that any adjustments which may result fromthis audit and the audit for fiscal year 1998 will not have a materially adverse effect on theSmithsonian’s financial statements.

(c) LitigationThe Smithsonian is a party to various litigation arising out of the normal conduct of its operations. In the opinion of the Smithsonian’s General Counsel, the ultimateresolution of these matters will not have a materially adverse effect on the Smithsonian’s fi-nancial statements.

(13) Employee Benefit Plans

The federal employees of the Smithsonian are covered by either the Civil Service RetirementSystem (CSRS) or the Federal Employee Retirement System (FERS). The terms of these plansare defined in federal regulations. Under both systems, the Smithsonian withholds fromeach federal employee’s salary the required salary percentage. The Smithsonian also con-tributes specified percentages. The Smithsonian’s expense for these plans for fiscalyear 1998 was $15,959,000.

The Smithsonian has a separate defined contribution retirement plan for trust fund em-ployees, in which substantially all such employees are eligible to participate. Under theplan, the Smithsonian contributes stipulated percentages of salary which are used to pur-chase individual annuities, the rights to which are immediately vested with the employees.Employees can make voluntary contributions, subject to certain limitations. The Smith-sonian’s cost of the plan for fiscal year 1998 was $9,365,000.

In addition to the Smithsonian’s retirement plans, the Smithsonian makes available cer-tain health care and life insurance benefits to active and retired trust fund employees. Theplan is contributory for retirees and requires payment of premiums and deductibles. Retireecontributions for premiums are established by an insurance carrier based on the average percapita cost of benefit coverage for all participants, active and retired, in the Smithsonian’splan.

112

The inclusion of retirees in the calculation of average per capita cost results in a higheraverage per capita cost than would result if only active employees were covered by the plan.Therefore, the Smithsonian has a postretirement benefit obligation totaling $6,097,000 atSeptember 30, 1998, for the portion of the expected future cost of the retiree benefits that isnot recovered through retiree contributions. The Smithsonian’s policy is to fund the cost ofthese benefits on the pay-as-you-go-basis.

(14) Income Taxes

The Smithsonian is recognized as exempt from income taxation under the provisions ofSection 501(c)(3) of the Internal Revenue Code (the Code). Organizations described in thatsection are taxable only on their unrelated business income. Periodical advertising sales isthe main source of unrelated business income. An IRS determination letter has been re-ceived supporting the Smithsonian’s taxexempt status. No provision for income taxes wasrequired for fiscal year 1998.

It is the opinion of the Smithsonian’s management that the Smithsonian is also exemptfrom taxation as an instrumentality of the United States as defined in Section 501(c)(1) ofthe Code. Organizations described in that section are exempt from all income taxation.The Smithsonian has not yet formally sought such dual status.

(15) Restructuring of Smithsonian Press / Smithsonian Productions Divisions

During fiscal year 1998, the Board voted to discontinue operations of three divisions of theSmithsonian Press/Smithsonian Productions auxiliary activity, including SmithsonianBooks, Smithsonian Collection of Recordings, and Smithsonian Videos, effective April 1,1998. Costs associated with the closure, include write-offs of inventory and accounts receiv-able, accruals for contractual product and fulfillment contract guarantees, guaranteed royal-ties and commissions, potential merchandise returns, litigation claims and severance costs.In fiscal year 1998, the total loss from operations and closure of the three divisions was$4,791,000, the net effect of which is reported within auxiliary activities in the statement offinancial activity.

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